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‘Second Opinion’ on DIÖS’ Green Financing Framework 1
Diös Green Financing Second Opinion
August 15, 2019
Diös is one of Sweden’s leading property companies with 330 properties and
a leasable area of 1.5 million square meters in northern Sweden. The company
manages and develops both commercial and residential properties and is a major
property owner in the central business district of ten growing cities in the northern
part of Sweden.
The Diös green financing framework provides a clear and sound framework
for investments into projects that align with the Green Bond and Green Loan
Principles. Eligible projects include fully or partly financing or refinancing
investments in clean transportation, energy efficiency, green buildings, pollution
prevention and control, and renewable energy projects related to commercial and
residential buildings in Sweden. Diös excludes fossil fuel-based energy
generation, nuclear energy generation, and potentially environmentally negative
resource extraction (e.g. rare earth elements or fossil fuels) from its use of
proceeds. Diös expects to allocate the majority of net proceeds to new green
commercial and residential buildings.
Diös’ governance policies and procedures meet and, in cases, exceed the
recommendations laid out in the Green Bond and Green Loan Principles. The
company has integrated UN Global Compact principles and SDGs into core
operations – internally and for suppliers – and has set ambitious renewable energy
and green building certification targets. Diös’ Green Business Council, responsible
for evaluating projects nominated for inclusion the green financing portfolio, has
high-level representatives from all core business functions, including
sustainability expertise; the latter has a veto power. The company reports annually
in compliance with the GRI G4 Core Standards, and reports to GRESB and EPRA.
With respect to project categories, the company’s baseline performance
standard is high and it has good ambitions to increase this standard. Diös is
certifying all new buildings to BREEAM level very good” (commercial) or Svanen
(residential) and requiring a 15% lower energy use than national building code
(BBR). It will certify all of its existing buildings retroactively. The company is
powered by 98% renewable energy and plans to make this 100%. It includes clean
transportation and energy efficiency solutions for its properties. Diös does not
currently conduct scenario stress testing or resilience planning but has indicated
that it is planning to enhance climate risk analysis. To further improve, Diös could
set more ambitious energy efficiency targets, develop a climate risk assessment
and management strategy and require higher green building classifications. Based
on the overall assessment of the project types that will be financed by the green
financing, governance and transparency considerations, Diös’ green financing
framework receives an overall CICERO Medium Green shading.
SHADES OF GREEN
Based on our review, we
rate Diös’ green financing
framework CICERO
Medium Green.
Included in the overall
shading is an assessment of
the governance structure of
the green financing
framework. CICERO
Shades of Green finds the
governance procedures in
Diös’ framework to be
Excellent.
GREEN BOND AND
GREEN LOAN
PRINCIPLES
Based on this review, this
Framework is found in
alignment with the
principles.
‘Second Opinion’ on DIÖS’ Green Bond Framework 2
Contents
1 Terms and methodology ___________________________________________________________________ 3
Expressing concerns with ‘shades of green’ ........................................................................................................... 3
2 Brief description of Diös’ green financing framework and related policies __________________________ 4
Environmental Strategies and Policies .................................................................................................................... 4
Use of proceeds...................................................................................................................................................... 5
Selection: ................................................................................................................................................................ 5
Management of proceeds ....................................................................................................................................... 5
Reporting ................................................................................................................................................................ 6
3 Assessment of Diös’ green financing framework and policies ____________________________________ 7
Overall shading ....................................................................................................................................................... 7
Eligible projects under the Diös’ green financing framework ................................................................................... 7
Background .......................................................................................................................................................... 10
Governance Assessment ...................................................................................................................................... 11
Strengths .............................................................................................................................................................. 11
Weaknesses ......................................................................................................................................................... 13
Pitfalls ................................................................................................................................................................... 13
Appendix 1: Referenced Documents List ___________________________________________________________ 14
Appendix 2: About CICERO Shades of Green _______________________________________________________ 16
‘Second Opinion’ on DIÖS’ Green Financing Framework 3
1 Terms and methodology
This note provides CICERO Shades of Green’s (CICERO Green) second opinion of the client’s framework dated
May 21, 2019. This second opinion remains relevant to all green financing issued under this framework for the
duration of three years from publication of this second opinion, as long as the framework remains unchanged. Any
amendments or updates to the framework require a revised second opinion. CICERO Green encourages the client
to make this second opinion publicly available. If any part of the second opinion is quoted, the full report must be
made available.
The second opinion is based on a review of the framework and documentation of the client’s policies and processes,
as well as information gathered during meetings, teleconferences and email correspondence.
Expressing concerns with ‘shades of green’
CICERO Green second opinions are graded dark green, medium green or light green, reflecting a broad, qualitative
review of the climate and environmental risks and ambitions. The shading methodology aims to provide
transparency to investors that seek to understand and act upon potential exposure to climate risks and impacts.
Investments in all shades of green projects are necessary in order to successfully implement the ambition of the
Paris agreement. The shades are intended to communicate the following:
Sound governance and transparency processes facilitate delivery of the client’s climate and environmental
ambitions laid out in the framework. Hence, the governance aspects are carefully considered and reflected in the
overall shading of the green financing framework. CICERO Green considers four factors in its review of the
client’s governance processes: 1) the policies and goals of relevance to the green financing framework; 2) the
selection process used to identify and approve eligible projects under the framework, 3) the management of
proceeds and 4) the reporting on the projects to investors. Based on these factors, we assign an overall governance
grade: Fair, Good or Excellent.
‘Second Opinion’ on DIÖS’ Green Bond Framework 4
2 Brief description of Diös’ green financing
framework and related policies
Diös is one of Sweden’s leading property companies with 330 properties and a leasable area of 1.5 million square
meters in northern Sweden. The company manages and develops both commercial and residential properties, and
is a major property owner in the central business district of ten growing cities in the northern part of Sweden. It
owns and manages ten city malls, which are in central locations.
Environmental Strategies and Policies
Diös signed the UN Global Compact in 2017 and has developed a Code of Conduct for employees and suppliers
based on the Global Compact’s ten principles of human rights, labor, environment, and anticorruption.
In addition to the above, Diös has adopted four Sustainable Development Goals: affordable and clean energy,
sustainable cities and communities, responsible consumption and production, and climate action. The company
has identified targets and initiatives under each of these SDGs, which include the following:
• Invest in and install another 20 solar cell projects in 2019.
• Add 700 charging points to promote the transition to electric vehicles.
• Replacing 100 percent of service car fleet with electric vehicles.
• Improving control of purchases of products for care and upkeep of properties that will regulate chemicals
management and make it easier to specify requirements for products used and promote more sustainable
consumption patterns.
• Requiring sustainability training internally
• Reducing energy use annually by three percent through optimization and new installations
One of the company’s long-term ambitions is achieving zero greenhouse gas emissions and 100% renewable
energy-powered buildings no later than 2045, in line with national targets. Currently, 98% of Diös’ buildings are
powered by renewable energy suppliers. Diös uses the Greenhouse Gas Protocol to measure and report corporate
emissions.
Diös is BREEAM certifying all of its new buildings to a minimum level of Very Good, and will certify all of its
existing buildings retroactively; as of March 31, 2019, 11% of the total rentable area was certified. For new
construction, Diös considers flood risk and sustainable water management practices as part of the BREEAM
certification. In light of recent exposure to damage from heavy snow and rising heat levels, Diös is exploring
opportunities to install geothermal and solar to power additional heating and cooling. Diös is also a member of the
Swedish Green Building Council.
The company has been reporting its sustainability activities in accordance with the Global Reporting Initiative
(GRI) G4 standards, using the Core option with industry-specific extensions, since 2016. In 2018, Diös reported
to GRESB and achieved a Green Star rating (the highest rating). Diös also reports to the European Public Real
Estate Association (EPRA) and received the Gold award in 2017 and 2018, representing the highest standard of
sustainability reporting and transparency.
‘Second Opinion’ on DIÖS’ Green Bond Framework 5
Use of proceeds
Diös will allocate an amount equal to the net proceeds to fully or partly finance or refinance investments in clean
transportation, energy efficiency, green buildings, pollution prevention and control, and renewable energy projects
in Sweden. Assets must comply with the categories laid out in the framework, as well as the exclusion criteria.
Diös’ long-term ambition is to allocate the majority (approximately 80%) of net proceeds to new green buildings
and related assets, defined as projects and assets financed within 12 months from completion. Diös expects 50
percent of new buildings to be commercial properties and 50 percent to be residential. Examples of eligible projects
include geothermal heating and cooling facilities, energy efficient windows in existing buildings, new solar cell
facilities and green buildings.
Diös excludes fossil fuel-based energy generation, nuclear energy generation, research and/or development of
weapons and defense, potentially environmentally negative resource extraction (e.g. rare earth elements or fossil
fuels), gambling and tobacco from its use of proceeds.
Selection:
The selection process is a key governance factor to consider in CICERO Green’s assessment. CICERO Green
typically looks at how climate and environmental considerations are considered when evaluating whether projects
can qualify for green finance funding. The broader the project categories, the more importance CICERO Green
places on the governance process.
Diös has set up a Green Business Council (GBC), which is a subcommittee of the Investment Council, and is
responsible for evaluating projects and assets identified and nominated for green financing to ensure compliance
with Green Terms. The projects and assets are identified by local business and energy optimization teams and
referred to the GBC for evaluation. The GBC includes the CEO, the CFO, the Head of Sustainability, the Treasury
Department, a green financing specialist, the head of energy optimization, and the director of business support. As
part of its review, it will evaluate overall environmental impact, including lifecycle considerations, potential
rebound effects, resilience and adherence to at least one of Diös’ five environmental objectives. A decision to
allocate proceeds will require a consensus decision, whereby the Head of Sustainability holds a veto.
The treasury department will keep an updated list of all green assets. Projects will be reviewed annually. If a
project or asset ceases to meet the Green Terms, it will be removed from the list and funds will be recycled.
Management of proceeds
CICERO Green finds the management of proceeds of Diös to be in accordance with the Green Bond and Green
Loan Principles.
The net proceeds from Green Financing will be credited to a dedicated account (the “Green Account”) or otherwise
tracked by Diös (together, the “Green Portfolio”). Deductions will be made from the Green Portfolio by an
equivalent amount corresponding to the financing, refinancing, investment or expenditure of Eligible Green Assets
or at repayment of any Green Financing.
If an Eligible Green Asset no longer qualifies or if the underlying project or asset is divested or lost, an amount
equal to the funds allocated towards it will be re-credited to the Green Portfolio. Funds may also be reallocated to
other Green Assets during the term of any Green Financing, unless otherwise agreed in the loan documentation.
‘Second Opinion’ on DIÖS’ Green Bond Framework 6
The treasury department will keep a record of the purpose of any change in the Green Portfolio and ensure that the
combined funds directed towards a specific Green Asset, by one or several sources of Green Financing or other
financing with specific use of proceeds, does not exceed its value.
Pending fund disbursement to Green Assets and while the Green Portfolio has a positive balance, the proceeds
may be invested or used by the treasury in accordance with Diös’ financial policy. Such unallocated funds may
for instance be invested in short-term interest-bearing securities, such as Swedish treasure bills (and related
entities) or Swedish municipal notes (including related entities).
The allocation of proceeds will be verified by Diös’ external auditor.
Reporting
Transparency, reporting, and verification of impacts are key to enable investors to follow the implementation of
green finance programs. Procedures for reporting and disclosure of green finance investments are also vital to
build confidence that green finance is contributing towards a sustainable and climate-friendly future, both among
investors and in society.
Diös will publish an annual report on its website that will detail the allocation of green funds and adherence to the
Green Terms, including the proportion of net proceeds allocated to new projects and assets and asset-level
performance indicators. The GBC is responsible for reporting and verifying the data in this report. The first report
is expected in March 2020 and will be available in English. In addition to annual reporting, a quarterly statement
will be published on the Green Website disclosing the total amount of Green Financing outstanding and the total
value of Green Assets, as well as any short-term investments or funds managed within Diös’ liquidity portfolio.
The annual report will include information about assets financed with Green Financing, a summary of Diös’
activities in the past year with regards to Green Financing, and information about Green Assets’ adherence to
relevant criteria. Diös will strive to provide estimates of future performance levels for assets that are not yet
operational. Diös will emphasize energy savings and greenhouse gas reductions as the most relevant performance
metrics for most projects. Diös has indicated that they will monitor greenhouse gas emissions in accordance with
the Greenhouse Gas Protocol, and disclose the grid factor used to calculate emissions. The report will be audited
by a third party.
‘Second Opinion’ on DIÖS’ Green Bond Framework 7
3 Assessment of Diös’ green financing
framework and policies
The framework and procedures for Diös’ green financing investments are assessed and their strengths and
weaknesses are discussed in this section. The strengths of an investment framework with respect to environmental
impact are areas where it clearly supports low-carbon projects; weaknesses are typically areas that are unclear or
too general. Pitfalls are also raised in this section to note areas where Diös should be aware of potential macro-
level impacts of investment projects.
Overall shading
Based on the project category shadings detailed below, and consideration of environmental ambitions and
governance structure reflected in Diös’ green financing framework, we rate the framework CICERO Medium
Green. Four out of five project categories receive a dark green rating, with Green Buildings receiving medium
green. Governance is considered excellent. The framework receives a Medium Green rating overall because of its
long-term ambition is to invest approximately 80% of proceeds in construction of new buildings, a category that
receives a Medium Green rating.
Eligible projects under the Diös’ green financing framework
At the basic level, the selection of eligible project categories is the primary mechanism to ensure that projects
deliver environmental benefits. Through selection of project categories with clear environmental benefits, green
financing aims to provide investors with certainty that their investments deliver environmental returns as well as
financial returns. The Green Bonds Principles (GBP) state that the “overall environmental profile” of a project
should be assessed and that the selection process should be “well defined”.
Category Eligible project types Green Shading and some concerns
Clean
transportation
Supportive infrastructure such as charging stations
for all types of electric vehicles, bicycle garages,
pedestrian walkways, bicycle lanes or other
investments that support and emphasize the use of
clean transportation solutions.
Dark Green
✓ Although electric modes of
transportation are clearly preferable to
fossil fuel-powered modes, we should
nevertheless be aware of the indirect
GHG emissions stemming from the
production and use, and strive to keep
increasing their efficiency. Consider grid
factors in life cycle emissions for electric
vehicles.
✓ For projects that require construction,
consider emissions intensity and
‘Second Opinion’ on DIÖS’ Green Bond Framework 8
resilience of materials and equipment
used.
Energy
efficiency
Investments in the existing portfolio of buildings
that target a lower overall energy use and an
improved environmental footprint. This could
include installation of geothermal heat/cooling,
energy efficient lighting, IT technology
(monitoring, efficiency management and remote
operation), energy efficient windows or an
upgraded ventilation system. Only directly
associated expenditure (e.g. material, installation,
and labor) is eligible for financing. Diös will
ascertain the following:
• High estimated energy savings in the
targeted area (minimum 20%)
• Minimize long-term negative climate
impact and potential rebound effects
• Minimal negative climate impact from the
technology used
Dark Green
✓ Diös has confirmed that no buildings in
its portfolio have fossil fuel-based
heating or electricity, minimizing the risk
of rebound or locked-in effects from
efficiency improvements.
✓ District heating is powered by biofuel,
waste and industrial waste heat in cities
of operation. However, Diös has
indicated that investments in energy
efficiency for district heating is not
included in this category.
✓ IEA recommends that efficiency of
building envelopes improve by 30% by
2025 to keep pace with increased
building size and energy demand, which
remains above this framework’s current
minimum threshold of 20%.
✓ Diös notes that energy efficiency
investments may far exceed the 20%
minimum threshold set in this
framework.
✓ Diös has confirmed that energy savings
are measured from baseline performance
before the investment. Current baseline
performance is already high because of
the low emissions grid factor and prior
investments in energy efficiency.
✓ Diös has confirmed that geothermal
heating and cooling installations and drill
holes are made in cities, not in
greenfields.
Green
buildings
New commercial properties
Development, acquisition or otherwise completed
properties that have, or will, receive i) a design
stage certification or ii) a post-construction
certification, or iii) an in-use certification in any of
the following building certification schemes at the
defined threshold or better: Miljöbyggnad “Silver”
or BREEAM-SE “Very Good” as well as a 15 %
lower energy use than required by the applicable
national building code (BBR).
Medium Green
✓ Voluntary environmental certifications
such as BREEAM or equivalents can
measure or estimate the environmental
footprint of buildings and raise
awareness of environmental issues, but
they fall short of guaranteeing an
environmentally-friendly or climate
resilient building.
‘Second Opinion’ on DIÖS’ Green Bond Framework 9
Existing commercial properties
Major renovation or otherwise completed
properties that have, or will receive i) a design
stage certification, ii) a post-construction
certification or iii) an in-use certification of at least
Miljöbyggnad ”Silver” or BREEAM In-Use “Very
Good” and achieve an energy target, as specified
below.
• Existing properties requires a 15% lower
energy use than required by the applicable
national building code (BBR).
Residential buildings
New or existing accommodation that i) have or
will receive a certification of Svanen or ii) achieve
at least 15 % lower energy use per square meter
than required by the applicable national building
code (BBR).
✓ According to Swedish building
regulations1, residential buildings in
northern Sweden (climate zone 1 and 2)
heated by other means than electricity
are allowed a maximum energy use of
130 kWh/m2 (110 kWh/m2 in climate
zone 2) and commercial buildings are
allowed 110 kWh/m2 (75 kWh/m2 in
climate zone 2)
✓ For projects that require construction,
consider emissions intensity and
resilience of materials and equipment
used.
✓ Flooding risk, in combination with
extreme weather and sea level rise, has
been observed in almost all regions in
the world.2 Flood risk for properties, is
of particular concerns in vulnerable
geographic regions, including Europe.
✓ Heat stress has implications for energy
use (i.e. increased air conditioning).
Consider potential implications of heat
stress on energy performance of
buildings and Diös’ environmental
targets.
Pollution
prevention and
control
Investments in waste management, such as
prevention, reduction or recycling of waste as
well as enabling infrastructure and facilities.
Dark Green
✓ Diös has confirmed fossil fuel-powered
vehicles associated with waste
management or other will not be
financed with proceeds.
Renewable
energy
Renewable energy production, such as on-site
solar power installations or stand-alone solar
farms, as well as related infrastructure
investments for example grid connections,
electric substations, networks or foundations.
Dark Green
✓ Solar power is part of a low-carbon 2050
solution. It may still, however, have
implications for biodiversity that should
be considered and the issuer is
encouraged to consider the full life cycle
of solar panels, i.e. responsibly sourced
materials, production and disposal.
1 https://www.iea.org/beep/Sweden/ 2 https://www.cicero.oslo.no/no/publications/internal/2871
‘Second Opinion’ on DIÖS’ Green Bond Framework 10
✓ Diös has confirmed that this category
only includes solar at this time.
Table 1. Eligible project categories
Background
In a low carbon 2050 perspective, the energy performance of buildings is expected to be improved, with passive
house technology becoming mainstream and the energy performance of existing buildings greatly improved
through refurbishments. The buildings and building construction sectors combined are currently responsible for
36% of global final energy consumption and nearly 40% of total direct and indirect CO2 emissions. Appliances
(excluding heating, cooking and cooling appliances) are responsible for around 17% of final electricity use by
buildings. Efficiency of building envelopes needs to improve by 30% by 2025 to keep pace with increased building
size and energy demand – in addition to improvements in lighting and appliances and increased renewable heat
sources.3 Energy efficiency improvements in buildings are thus important building blocks towards reaching the
2°C goal.
In Sweden, Building Regulations BBR10 (2012) for new residential buildings 4 and for new non-residential
buildings (2010)5 establish three climate zones with associated requirements for building energy performance. The
majority of Diös’ properties are in climate zone 1 and use “other than electrical heating.” As of March 2019, Diös
has 135 properties located in climate zone 2 (Gavle, Dalarna and Sundsvall), the majority of which are non-
residential.
Global electricity demand increased 4% in 2018, with low-carbon generation expanding 6% to meet a considerable
share of this growth. Nevertheless, power sector CO2 emissions rose by 2.5%, with coal responsible for 80% of
this increase. In 2018, 42% of all energy-related CO2 emissions came from the power sector, causing it to remain
the largest source of energy-related CO2 emissions.6 Investments in the rapid transition to renewable energy
powered economies are therefore increasingly critical.
3 http://www.iea.org/tcep
6 https://www.iea.org/tcep/power/
Residential Non-residential
kWh/m2/year Electrically heated Other than electrical
heating
Electrically heated Other than
electrical heating
Climate zone 1 95 130 95 110
Climate zone 2 75 110 90 75
Climate zone 3 55 90 70 55
‘Second Opinion’ on DIÖS’ Green Bond Framework 11
Transportation is responsible for 24% of direct CO2 emissions from fuel combustion. Road vehicles – cars, trucks,
buses and two- and three-wheelers – account for nearly three-quarters of transport CO2 emissions. Road transport
emissions have increased despite progress in electrification, largely due to rising global GDP and consumer
preference for larger, heavier vehicles. The global share of electric car sales rose to more than 2.5% in 2018, and
fleets of electric buses and trucks are being procured in more and more cities around the world.7
The waste sector contributes almost 5% of global GHG emissions mainly from landfill and wastewater methane
and nitrous oxide as well as CO2 from waste incineration.8
Physical climate change such as extreme events, heat stress, and flooding are affecting all sectors and regions
already. Due to historical emissions, we are locked in for approximately 1.5°C global warming.9 Given today’s
policy ambition, the world is most likely heading toward 3°C warming in 2100 which implies accelerated physical
climate impacts, including more extreme storms, accelerated sea level rise, heat stress, droughts, and flooding.10
For near-term physical risk to real estate assets, investors and companies must consider the probabilities of these
physical climate impacts, as well as resiliency measures to plan for and protect against the worst. Investments in
energy efficiency measures, particularly in regions vulnerable to heat waves, are important climate resiliency
measures. Investments in flood and water damage management measures11 are critical for properties in flood zones
and coastal areas.
Governance Assessment
Four aspects are studied when assessing the Diös’ governance procedures: 1) the policies and goals of relevance
for the green financing framework; 2) the selection process used to identify eligible projects under the framework;
3) the management of proceeds; and 4) the reporting on the
projects to investors. Based on these aspects, an overall grading
is given on governance strength falling into one of three classes:
Fair, Good or Excellent. Diös has integrated UN Global
Compact principles and SDGs into core operations – internally
and for suppliers - and has set ambitious renewable energy and
green building certification targets. The company’s Green
Business Council, responsible for evaluating projects
nominated for inclusion the green financing portfolio, has high-
level representatives from all core business functions, including
sustainability expertise; the latter has effective veto power. Finally, the company reports annually in compliance
with the GRI G4 Core Standards, and reports to GRESB and EPRA. Based on these and other factors, CICERO
Green’s overall assessment of Diös’ governance structure and processes gives it a rating of Excellent.
Strengths
Diös’ governance processes meet and, in cases, exceed recommendations laid out by the Green Bond Principles.
The company is a signatory to the UN Global Compact and has integrated relevant UN Global Compact principles
and SDGs into its overall operational objectives, processes and supply chains through detailed Codes of Conduct
that are made publicly available (see Appendix 1 for a full list and access). The latter requires that suppliers
consider environmental risk to operations, reduce waste and emissions. Diös has set ambitious targets for powering
7 https://www.iea.org/tcep/transport/ 8 https://www.ipcc.ch/pdf/assessment-report/ar4/wg3/ar4-wg3-chapter10.pdf 9 https://www.cicero.oslo.no/en/posts/news/scientists-demystify-climate-scenarios-for-investors 10 https://www.ipcc.ch/pdf/assessment-report/ar5/syr/SYR_AR5_FINAL_full_wcover.pdf 11 https://www.intactcentreclimateadaptation.ca/programs/home_flood_protect/resources/
‘Second Opinion’ on DIÖS’ Green Bond Framework 12
all properties with renewable energy by 2040 and certifying all commercial properties to the BREEAM level “very
good” and all residential buildings by the Nordic Svanen system12. These organizational policies and targets
demonstrate the company’s commitment to minimizing its environmental impact.
The company’s Green Business Council (responsible for evaluating nominated projects and investments) has a
mandate to consider resilience, rebound effects, and life cycle analyses before approving projects. In an interview
with the company, Diös confirmed that recent exposure to damage from snow and higher costs from heat waves
have prompted the company to study climate resilience and, as a result, the company expects to enhance climate
risk analysis, in line with the TCFD recommendations.
The GBC has high-level representation from across the company, including a dedicated sustainability expert and
green financing specialist that effectively have veto power over project evaluation. The treasury department, also
represented on the GBC, is tasked with monitoring compliance of projects with the selection criteria and has
documented a process for dropping projects from the green financing portfolio if the project fails to meet standards.
The company’s demonstrated record on reporting exceeds best practices. Diös has been publishing an annual
sustainability report in compliance with the GRI G4 Core standards with industry-specific extensions since 2016,
and has been reporting to GRESB and EPRA with the highest awards. The company reports on stakeholder
engagement initiatives and conducts a full materiality analysis to identify relevant performance indicators. The
resulting environmental indicators include energy use, water use, emissions, and waste.
With respect to project categories, the company’s baseline performance standard is high and ambitions outlined in
this framework promise to increase that standard. The framework includes clean transportation, energy efficiency,
renewable energy, green building certification, and waste management, which are all key elements for a holistic
approach to low carbon, climate resilient buildings. CICERO commends inclusion of clean transportation, energy
efficiency, and renewable energy solutions for green building management, and notes that Diös emphasizes climate
resilience and life cycle analysis as part of its screening process for projects and suppliers.
The company is already powered by 98% renewable energy which minimizes the potential for lock-in effect with
energy efficiency and green building investments. Diös is certifying all new buildings to BREEAM level “very
good,” and will BREEAM certify all of its existing buildings retroactively As of March 31, 2019, 11% of the total
rentable area was BREEAM certified. Diös is also requiring a 15% lower energy use than required by the
applicable national building code (BBR) for both new and existing residential and commercial buildings. Diös’
current average energy use per square meter for heating, cooling and electricity is 157 kWh / sqm in 2017 in
commercial and residential buildings. The projects outlined in this framework will improve its performance. These
requirements for investments in green buildings and performance target are commended. CICERO Green
encourages Diös to continue exploring and incorporating industry best practices – such as ambitious environmental
standards for suppliers and low carbon construction materials – in its operations.
For energy efficiency, Diös requires a minimum of 20% energy savings for investments under this framework, and
expects some investments to far exceed this minimum threshold. The IEA recommends that efficiency of building
envelopes improve by 30% by 2025 to keep pace with increased building size and energy demand. The low
emissions grid and Diös’ high level of renewable energy targets helps to reduce the potential of locked in emissions
normally introduced by energy efficiency projects. However, CICERO Green encourages Diös to continue
increasing its ambition and setting a global example on this front by aligning with IEA recommendations.
Diös owns and manages ten centrally located city malls. A pilot project in one of the malls aims to optimize
transportation of goods and services to and from the mall by converting parts in the mall into “warehouse as a
service” and “pickup points” for waste collection and e-commerce. If the pilot is successful, Diös plans to expand
12 https://www.svanemerket.no/english/
‘Second Opinion’ on DIÖS’ Green Bond Framework 13
the services and locations. By combining delivery services for tenants’ goods in stage one (adding on services for
laundry, pharmaceuticals, food, and other types of deliveries in future stages) and pickup of waste, dirty laundry
and recycling materials, the pickup points will help minimize the number of vehicles going into and out of the city
center. This is an innovative, progressive solution that has the potential to significantly decrease emissions from
Diös’ direct and indirect operations. CICERO commends the initiative and encourages Diös to continue developing
it as part of their broad and inclusive sustainability strategy.
Weaknesses
No significant weaknesses perceived at this time.
Pitfalls
Diös does not currently conduct scenario stress testing or climate resilience planning. The building sector is
particularly vulnerable to the physical impacts of climate change, such as rising sea levels, extreme storms and
flooding. Stronger hurricanes in combination with sea level rise in coastal areas, in addition to increases in heavy
precipitation and flooding in urban areas, have already been observed and are expected to increase in Europe by
mid-century across the range of climate scenarios explored in the IPCC 4th Assessment Report. Rising heat stress
results in increased dependence on air conditioning and energy use. These physical impacts of climate change can
cause property damage, discount property value, increase operational costs, and increase insurance premiums or
change insurance coverage for residential and commercial properties in Europe. The company has indicated that
it is planning to enhance climate risk analysis to respond to recent increases in damage from snow and higher
energy costs from heat waves. CICERO Green encourages Diös to assess and anticipate these risks to better
identify and protect its customers, assets, and investors and respond to the TCFD recommendations.
Impact reporting for green financial instruments other than green bonds is a relatively new field. We encourage
the Diös to be as transparent and clear as feasible regarding the attribution of achieved impacts to single
instruments, such as green loans.
‘Second Opinion’ on DIÖS’ Green Bond Framework 14
Appendix 1: Referenced Documents List
Documen
t Number
Document Name Description
1 Diös Green Financing Framework, June 2019 Framework outlining use of proceeds, selection
criteria, management of proceeds, and reporting
procedures for Diös
2 Annual report 2018 Complete review of the business, strategy,
policies, its properties, financial information and
performance.
3 Sustainability appendix GRI G4 Core compliant sustainability report
with industry-specific extensions for construction
and the property sector.
4 EPRA spreadsheet Data on energy, GHG emissions, water, waste
and certified assets for Dios’ assets by geography
and property type.
5 Anti-corruption Policy Outlines Diös’ intolerance for anticorruption in
the workplace
6 Employee Code of Conduct Outlines Diös stance on human rights, working
conditions, environmental responsibility,
business ethics, and communication.
7 Environmental Policy Includes language on suppliers and
subcontractors, prioritizing energy efficiency and
improving recycling rates.
8 Equal Opportunity and Anti-Discrimination Policy Aims and objectives, responsibility and
governance, and interpretation of policy on equal
opportunity and non-discrimination
‘Second Opinion’ on DIÖS’ Green Bond Framework 15
9 Health and Safety Policy Aims and objectives, responsibility and
governance, and interpretation of policy on
health and safety within Dios
10 Supplier Code of Conduct Reviews Dios’ policy requirements on human
rights, working conditions, environment,
business ethics and communication.
‘Second Opinion’ on DIÖS’ Green Bond Framework 16
Appendix 2: About CICERO Shades of Green
CICERO Green is a subsidiary of the climate research institute CICERO. CICERO is Norway’s foremost institute for
interdisciplinary climate research. We deliver new insight that helps solve the climate challenge and strengthen
international cooperation. CICERO has garnered attention for its work on the effects of manmade emissions on
the climate and has played an active role in the UN’s IPCC since 1995. CICERO staff provide quality control and
methodological development for CICERO Green.
CICERO Green provides second opinions on institutions’ frameworks and guidance for assessing and selecting
eligible projects for green bond investments. CICERO Green is internationally recognized as a leading provider of
independent reviews of green bonds, since the market’s inception in 2008. CICERO Green is independent of the
entity issuing the bond, its directors, senior management and advisers, and is remunerated in a way that prevents
any conflicts of interests arising as a result of the fee structure. CICERO Green operates independently from the
financial sector and other stakeholders to preserve the unbiased nature and high quality of second opinions.
We work with both international and domestic issuers, drawing on the global expertise of the Expert Network
on Second Opinions (ENSO). Led by CICERO Green, ENSO contributes expertise to the second opinions, and is
comprised of a network of trusted, independent research institutions and reputable experts on climate change
and other environmental issues, including the Basque Center for Climate Change (BC3), the Stockholm
Environment Institute, the Institute of Energy, Environment and Economy at Tsinghua University and the
International Institute for Sustainable Development (IISD).